What's Hot

Yum! Brands Beats In Q1, Pizza Hut A Weak Link

Yum! Brands (YUM) beat out earnings and revenue estimates for Q1, though numbers were still down year-on-year.

The fast food company — which holds international chains Taco Bell, KFC and Pizza Hut — reported earnings per share at $0.65, up 17 percent YoY and above the average analyst estimate of $0.60.

Following the release of the company’s earnings report on Wednesday market open, YUM shares spiked nearly 3.67 percent to $67.78 in early-morning trading. Though tempered somewhat by the rest of the day, YUM still looks to close on a high note.

Revenues for Q1 2017 hit $1.42 billion, down 1.8 percent from the same period last year when Yum brought in 1.44 billion. The company reported that the loss was largely due to lower company sales, down 5 percent YoY.

Still, YUM beat out average revenue estimates, which had pegged the company would only see $1.35 billion in Q1.

“Our strategic transformation of Yum! Brands is already well underway, helping us deliver a solid start to 2017 with core operating profit growth of 9% in the first quarter,” said CEO Greg Creed in the release.

YUM attributes the Q1 growth to Taco Bell’s 8 percent growth in same-store sales, as well as a 13 percent growth in KFC’s core operating profit.

Combined, YUM saw system sales grow, driven by a 2 percent rise in same-store sales growth and 3 percent net unit growth across divisions.

If there was a weak link in the YUM chain of divisions, it was most certainly Pizza Hut.

The global pizza chain’s comp-sales fell 3 percent overall in Q1. While international emerging and international emerging markets saw comps grow 2 and 1 percent respectively, U.S. comp-sales fell 7 percent in the period.

The company looks in part to turn the pizza slump around with a Transformation Agreement with franchise owners said Restaurant News.

The deal will see YUM invest $130 million in its Pizza Hut division to improve brand marketing alignment, accelerate enhancements to O&T and include a permanent commitment to incremental advertising among franchise owners.

This strategy is similar to the one KFC leveraged to pull KFC out of a similar slump in 2015.

“We remain confident that our multi-year strategy to be more focused, more franchised and more efficient,” Creed said, “will further strengthen our brands, accelerate growth, increase consistency in our results and increase capital returns.”


Latest Insights: 

Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. The July 2019 Pay Advances: The Gig Economy’s New Normal, a PYMNTS and Mastercard collaboration, examines pay advances – full or partial payments received before an ad hoc job is completed – including how gig workers currently use them and their potential for future adoption.

Click to comment


To Top